Deck 16

Question 1

Depreciable basis is:

Answer 1

Cost associated with the purchase of the asset and with getting the asset ready for its intending use

Question 2

Definition of real property

Answer 2

land and all items permanently affixed to the land (e.g., buildings, paving, etc.)

Question 3

Capital assets:

Answer 3

Property (real and personal) held by a taxpayer for investment

Question 4

“Like-kind” exchange

Answer 4

Same type of investment; exchange of property used in the trade or business or held for investment (exception of inventory, stock, securities, real property)

Question 5

Gain recognized is the lessor of:

Answer 5

Boot received or gain realized

Question 6

Amount realized for property with no boot =

Answer 6

FMV of new property - adjusted basis

Question 7

Amount realized for property with boot paid =

Answer 7

FMV of new property - boot - adjusted basis

Question 8

New basis of like-kind property with boot received =

Answer 8

Adjusted basis of old property + gain recognized - boot received

Question 9

Amount realized for property with boot received =

Answer 9

FMV of new property + boot - adjusted basis

Question 10

What is the basis for inherited property?

Answer 10

FMV on the date of death

Question 11

Section 1231 Assets

Answer 11

Depreciable assets and all real property used in a trade or business and held over 12 months

Question 12

Gross profit percentage =

Answer 12

Gain (GP)/selling price

Question 13

Real property

Answer 13

land and building

Question 14

Personal property

Answer 14

machinery, equipment, and cars

Question 15

Basic formula for determine gain or loss =

Answer 15

Amount received (amount realized) - adjusted basis of asset sold

Question 16

Adjusted basis of asset sold (three kinds)

Answer 16

1. Purchased property
2. Gifted property
3. Inherited property

Question 17

Adjusted basis for purchased property

Answer 17

Cost of the property

Question 18

Adjusted basis for gifted property

Answer 18

NBV/rolleover cost; Exception: if you sell for higher then use donor’s basis to determine gain, if you sell for lower then use lower FMV at date of gift, if you sell between, no gain or loss

Question 19

A gain is not taxed if the taxpayer can “HIDE IT”

Answer 19

H: homeowners; I: Involuntary conversion; D: Divorce property settlement; E: Exchange of like kind; I: installment sale; T: treasury capital & stock

Question 20

Homeowners exclusion =

Answer 20

$250,000 for single; $500,000 for married filing jointly